Shake Shack (SHAK) Q4 2020 earnings summary

Executive summary

• Pandemic-driven disruption sharply reduced FY 2020 sales and profitability, but Shack sales improved sequentially in each of the final nine months and digital channels remained a major sales driver.

• Ended FY 2020 with 311 system-wide Shacks, up 13% YoY, and $183.8M in cash, cash equivalents and marketable securities; no revolving-credit borrowings remained outstanding.

Financial highlights

• FY 2020 revenue fell 12.1% to $522.9M; excluding the 53rd week, revenue declined 13.9% YoY. System-wide sales fell 13.0% to $778.9M, or 15.0% excluding the extra week.

• Shack sales declined 11.9% to $506.3M, including $10.7M from the 53rd week; excluding it, sales fell 13.7%. Same-Shack sales decreased 27.8%.

• GAAP operating loss was $43.9M vs. $25.7M operating income in FY 2019; net loss was $45.5M vs. $24.1M net income.

• Shack-level operating profit, a non-GAAP measure, fell 44.2% to $71.4M, or 14.1% of Shack sales; Adjusted EBITDA fell to $22.7M from $81.8M.

• Adjusted pro forma net loss was $22.3M, or $0.56 per fully exchanged diluted share, vs. adjusted pro forma net income of $27.4M, or $0.72, in FY 2019.

Outlook and guidance

• Targeted 35–40 new domestic company-operated Shacks and 15–20 licensed openings in FY 2021; targets rise to 45–50 domestic-operated and 20–25 licensed openings in FY 2022.

• First drive-thru was targeted for Q4 2021, with 5–8 additional drive-thrus planned through FY 2022; most new 2021 Shacks were expected to include Shack Track pickup formats.

• Recovery was expected to take time, particularly in New York City and dense urban areas; FY January same-Shack sales were down 5%, then down 16% through the first three weeks of February amid severe weather closures.

• Nationwide delivery through owned app channels was expected to be largely rolled out by the end of Q2 2021; contactless mobile payment was also expected nationwide by then.